From the course: Financial Modeling and Forecasting Financial Statements
Join today to access over 24,700 courses taught by industry experts.
Realistic but challenging "plug": Loans
From the course: Financial Modeling and Forecasting Financial Statements
Realistic but challenging "plug": Loans
- Let's try the most realistic plug figure: loans payable. For most companies, the first option in obtaining financing is through borrowing. Raising new capital from investors is more expensive in terms of giving away partial ownership and typically takes more time, more investment advisor costs and more public disclosure of internal strategic plans. And even if a company does plan on seeking new investor funds, those funds are often coupled with some new borrowing in order to maintain an appropriate financing mix. So we need to learn how to include new borrowing in our financial statement forecast. Hey, easy, from the initial example we did before with Year 2 Property, Plant and Equipment of $700, we learned that additional financing needed in Year 2 is $368. Rather than add that to Paid-in Capital, let's just add it to Loans Payable instead. We had originally planned on Loans Payable in Year 2 of $400, we'll just bump that…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Download courses and learn on the go
Watch courses on your mobile device without an internet connection. Download courses using your iOS or Android LinkedIn Learning app.